Stock of the Week: TripAdvisor

Don’t underestimate the return to travel.

Andrew Willis 22 November, 2021 | 6:55AM
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Andrew Willis: TripAdvisor (TRIP)’s shares took a ten percent tumble recently on quarterly earnings that missed consensus expectations. But how high were these expectations? Because when you are talking about a return to normal amounts of travel post-pandemic, the timeline should be in years, not quarters.

Despite concerns about a return in travel demand, we think that by 2023 we could be entering a world where we see much more travel than 2019 levels. We just increased our fair value estimate for TripAdvisor by two dollars to account for higher long-term travel demand-driven higher by remote working trends. And there might be more travelling at home and within destinations to activities and tours in the growing “Experiences” business.

The potential growth for TripAdvisor could also be maintained by its narrow economic moat, or competitive advantage, that senior equity analyst Dan Wasiolek says is related to the company’s network effect. And the launch of a new “Plus” member program suggests, unsurprisingly, a more connected traveller post-pandemic.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
TripAdvisor Inc25.59 USD2.16Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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